WE OWN TWO PROPERTIES, CREDIT CARD MAXED OUT & FEEL LIKE WE’VE HIT A BRICK WALL! WHAT WOULD YOU DO?

I would get a LOC on the investment property. There's nearly $100K available at 80% lend.

Let the interest for the investment property come out of that while you pay your cash into the credit cards.

After that is paid out decide whether you can afford another IP (based on the cash flow, your income etc). Use the LOC as the deposit, legals, stamp duty etc and get a new loan for 80% borrow on the new IP.

Be careful though not to contaminate the LOC by using some for the IP interest and some for your PPOR reno.

Bozena,
You are taking the first step in recognizing that you need to make some changes.
I always start with a Spreadsheet an list everything, write down all the interest per month an then wages that come in/expenses that go out.there are some great free downloads for this all over the net.Once you see it all on paper, then look at budgeting your money,that is how we started 10 years ago.It will be very tough in the beginning (an at that point most people just give up)DON'T…It does get better an easier..Start with the steps above first an then see it all in black an white an then re-evaluate.
TRACTION

On the credit card:

Get the credit card paid off as soon as is possible/practical. If drawing down LOC/loan funds to pay it off, DO NOT be tempted to double-dip (i.e. re-spend to MAX!): This takes discipline. Reduce your limit to something heaps more manageable as you pay it down.

Another idea is to transfer the balance to a x months interest free card, and pay it off at 0% (some you can go as long as 12 months on balance transfers, watch the fees/charges). Cut up your old card (and the new one). And get cracking to pay as much of it off as you can, in the interest free period. Reduce your available limit as you go

Sure, it'll hurt initially, but when it's gone, you'll feel a whole lot better.

If you have to have a credit card, then keep the balance minimal (say $5000), and aim to pay it off each month. (i.e. you have cash, or credit, your total funds does NOT equal CASH + CREDIT, which is how you may have gotten here in the first place…)

Agree with Luke's comments on investing strategy – determine what you want, then setting goals to achieve that direction.

If your a serious property investor and you want to go to the next level then your better off to sell your family home and rent a nice house (so your wife doesn't divorce you)
 
Your home is capital gains free. Set your finances up so you have an investment reserve before you proceed to your next investment property. A good rule is to have 6 months living expenses in reserve and don't touch it. For the first 2 investment properties have 3 months rent in reserve and for any further investments you acquire 6 months rent in reserve will make you bullet proof..

The next 10 years will be very tough in the property game. Having said that there are going to be so many distressed sellers.
The key is… cash is king …if you have the reserves and the equity and are paying interest only on your investments your compound net worth over the next ten years will be significant.

Just remember you make your profit when you buy. Our tax system rewards those who use negative gearing prudently

Regards NR

I would suggest you look at selling the IP. Do the sums. You may have to pay CGT, but this will be small and releasing equity would allow you to pay down your PPOR loan and saving you heaps of non deductible interest.

You can then get back on track quickly and then reborrow some money on the PPOR with a LOC and purchase a new investment. Net result is lower PPOR loan and higher IP loan saving you $$$ in tax each year.

Alternatively you could talk to your tax advisor and set up a LOC and then use this to pay the interest on your IP loan and use all the rent from your IP to pay off your credit cards. You need to set this up properly to work.